Flag raised over high cost-to-income ratio

THE cost-to-income ratio, which compares a bank’s operating income to the cost of maintaining operations, has remained high for the local banking sector in comparison to peers in the region over a 10-year period, a sector survey revealed this week.

Higher ratios suggest that a bank’s operating costs are out of control, while lower ratios indicate that a bank is functioning more profitably.

“Cost-to-income ratio has improved from a peak of 96,6% in 2013 to 71,6% in CY21 (calendar year 2021), remaining flat year-on-year to the 72% cost-to-income ratio recorded in CY20,” Inter Horizon Securities (IH) said in its annual banking sector report released on Wednesday.

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